Markets get butchered; Sensex post biggest one day fall in last two months

Indian markets which looked controlling its breaths in early deals despite feeble global cues, went for a toss after the announcement of the Reserve Bank of India’s (RBI) first bi-monthly policy review for the fiscal, where it going much on expected lines reduced repo rate by 25 basis points from 6.75 per cent to 6.5 per cent, while narrowed the policy rate corridor from +/-100 basis points (bps) to +/- 50 bps by reducing the MSF rate by 75 basis points and increasing the reverse repo rate by 25 basis points. The RBI kept the cash reserve ratio (CRR) unchanged at 4.0 per cent of net demand and time liabilities (NDTL) but reduced the minimum daily maintenance of the CRR from 95 per cent of the requirement to 90 per cent with effect from the fortnight beginning April 16, 2016. Stock markets, which had rallied on hopes that Rajan would announce a bigger rate cut, in a knee-jerk reaction fell sharply despite the RBI saying that its policy would remain 'accommodative', raising the prospect of another rate cut later this year. RBI also pledged to inject more long-term liquidity. Though, traders welcomed the move but the 25 bps cut seemed already been priced into markets and they were looking for some unexpected or rather a firm outlook for further rate cuts. Traders were unable to get any support with global rating agency Moody's Investors Service's statement that it is looking at India’s pace of reforms and pace of implementation. It added that the agency has a positive outlook on India’s BAA3 rating and that signals upward pressure on the rating over the next 12 to 18 months.

On the global front, the Asian markets followed the footsteps of their US counterparts and ended mostly in red, with an exception of China which coming after a long weekend bounced back to post gains of over a percent for the day. The Japanese market plunged, even as Bank of Japan Governor Haruhiko Kuroda said he will keep monitoring foreign-exchange markets and reiterated the potential for additional monetary stimulus, as the yen jumped to a 17-month high. The European markets too made a weak start on fading hopes about an output curb by oil producers, which continued to pressure oil prices and energy stocks.

Back home, the Indian markets posted their worst day in nearly two months, as investors booked profits, with bears in full control. Sensex not only slipped below its 100 days moving average but also lost its crucial psychological mark of 25000. Nifty too barely managed to protect its 7600 level in the brutal slump of the day. Apart from RBI’s policy coming on expected lines, traders were also concerned with NITI Aayog Vice Chairman Arvind Panagariya's statement that Prime Minister Narendra Modi is very keen to do reforms though it may take a little longer due to democratic processes. Traders even overlooked the surge in rupee against the dollar, which wiped off its yearly losses and surged to four months high. Though, the selling pressure was visible across sectors but the banking stocks were among the worst hit in trades and the Bank Nifty closed at its lowest level in last two months. The other interest rate sensitive stocks too witnessed selling pressure. Realty, auto, capital goods and Metal stocks too faced selling pressure. Aviation stocks took some encouragement by Union Minister Arun Jaitley's statement that the government plans to develop 25 regional airports in order to improve air connectivity. He said the government is looking to develop 15 airstrips owned by the state governments and 10 that are with the Airports Authority of India (AAI), most of them ended in green, while Jet Airways gained over a percent, Spicejet and Indigo ended higher by over half a percent.

Finally, the BSE Sensex slumped by 516.06 points or 2.03% to 24883.59, while the CNX Nifty plunged by 155.60 points or 2.01% to 7603.20.

The BSE Sensex touched a high and a low 24837.51 and 25372.44, respectively. There was just 1 stock in green against 29 stocks in red on the Sensex. The broader indices too ended in red; the BSE Mid cap index was down by 1.47%, while Small cap index lost 1.40%.

The lone gaining sectoral index on the BSE was Consumer Durables up by 0.26%, while Bankex down by 3.21%, Auto down by 2.82%, Metal down by 2.81%, Capital Goods down by 2.64%, Realty down by 2.59% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 0.12%. On the flip side, Adani Ports &SEZ down by 6.23%, ICICI Bank down by 5.45%, SBI down by 5.38%, Bharti Airtel down by 5.03% and Tata Motors down by 4.52% were the top losers.

Meanwhile, concerned over rising cases of wilful default on loans, Finance Minister Arun Jaitley has said that the industry is fighting a battle of creditability and asked to adopt positive and ethical approach towards non-performing assets (NPAs) or bad debts.

FM added that 'When the cycle reverses, the NPAs can also be reversed but the approach of the leaders of the industry will certainly have to be always positive and ethical because it is that approach which is going to add to their credibility. He also said the government has been trying to address the problem of NPAs in sectors like steel, textile, highways and infrastructure, which are on account of economic slowdown.

There are about 7,686 wilful defaulters who owe Rs 66,190 crore to public sector banks. Of these, suits have been filed in 6,816 cases and FIR has been lodged for 1,669 cases. Banks have initiated action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi) Act in 584 such cases.

The gross Non Performing Assets (NPAs) of public sector banks (PSBs) increased to Rs 3,61,731 lakh crore or 7.30 per cent as on December 2015 from Rs 2,67,065 lakh crore or 5.43 per cent as on March 2015.

The CNX Nifty traded in a range of 7588.65 and 7736.30, there were 4 stocks on gainers side against 47 declining ones on the index.

The gainers on Nifty were HCL Tech. up by 0.40%, BPCL up by 0.38%, Power Grid Corpn. up by 0.32% and Lupin up by 0.17%. On the flip side, Adani Ports &SEZ down by 6.72%, ICICI Bank down by 5.51%, SBI down by 5.32%, Bharti Airtel down by 5.16% and Tata Motors - DVR down by 5.02% were the top losers.

European markets were trading with deep cuts, Germany’s DAX slumped by 236.86 points or 2.41% to 9,585.22, France’s CAC lost 100.85 points or 2.32% to 4,244.37 and UK’s FTSE 100 was down by 90.91 points or 1.47% to 6,073.81.

Most of the Asian markets suffered sharp sell-off on Tuesday, as the oil resumed its plunge on uncertainty of an output cut at the upcoming OPEC and Non- OPEC members meet. Traders also remained concerned ahead of the releases of US Federal Reserve’s minutes from its latest meeting on Wednesday and struggled to find fresh reasons to buy. The Japanese markets witnessed cut of over two percent after the yen jumped to a 17-month high. Also, the latest survey from Nikkei revealed that activity in Japan's services sector remained unchanged in March. The Hong Kong markets too lost around two percent, however the Shanghai Composite Index that resumed trading after a Monday holiday, bucked the regional trend and gained 1.4 percent, as investors digested better-than-expected manufacturing surveys released over the weekend.